A Louisiana House committee Wednesday put the Legislature on a collision course with Gov. Bobby Jindal over the state budget by defeating a measure that supporters said was needed to prevent the governor from vetoing the budget.
The move by the Ways and Means Committee came on much-derided legislation that would create the SAVE fund for higher education. The larger issue is that the legislation would create a gimmicky tax credit that Jindal needs to accept the revenue-raising bills that would help balance next year’s budget.
Wednesday’s vote sent tremors through the State Capitol because it set the Legislature on an uncharted course only eight days before the legislative session ends. No governor has vetoed the entire budget since the 1974 Constitution took effect.
The vote also showed that the House and the Senate are at odds over the issue. Six hours after the House committee voted, the Senate Finance Committee approved three House tax bills, but only after attaching the SAVE fund legislation to them.
If Jindal vetoed the budget, legislators could override him with a two-thirds vote in each chamber. If they failed to muster that vote, one of the questions raised Wednesday was whether state government — and all the services it provides — would shut down until a budget finally is approved. The budget is supposed to take effect for the new fiscal year that begins on July 1.
Legislators are proposing to raise at least $700 million in new revenue — by raising the cigarette tax and trimming a variety of business tax breaks — and cut spending to close a projected $1.6 billion budget deficit for next year.
Wednesday’s developments in the Legislature came on the same day that Jindal’s office revealed he will hold a major announcement in New Orleans on June 24, believed by political analysts to be his formal entry into the Republican primary campaign for president.
Jindal aides — but not the governor himself — lobbied Ways and Means members to approve the measure, Senate Bill 284. It lost on a 10-9 vote.
Legislation that is defeated in committee almost always dies for the session. But supporters of the measure on Wednesday afternoon began trying to round up the votes on the House floor to compel the committee to send the bill to the full House and thus keep it alive.
To get SB284 out of committee would take a majority of those in the House who voted, said Rep. Joel Robideaux, R-Lafayette, the Ways and Means chairman.
The state Senate wasted little time in trying to force the House to revive the measure by holding hostage its legislation.
State Sen. Jack Donahue, R-Mandeville, is the sponsor of the SAVE fund legislation and is the powerful chairman of the Senate Finance Committee. He got his committee to attach the SAVE fund Wednesday night to three different Robideaux tax bills and then promptly approve them.
“They threw stones at Sen. Donahue, and he threw some back,” Senate President John Alario, R-Westwego, said afterward.
The House Bills are 449, 501 and 829, which would reduce the state tax subsidy for films produced in Louisiana.
Alario, who has been Jindal’s chief protector in the Legislature during the past four years, said the Senate would keep attaching the SAVE fund to other must-pass House legislation until House leaders negotiate a truce. “We got time to talk and stop all the sword rattling,” he said.
The Senate already approved the SAVE fund on a 29-10 vote.
“What the House did was deliberate and thoughtful,” Robideaux said in a telephone interview after the hearing. “If they want to start playing games and trying to get under people’s skin, we’ll see how it works.”
The House and Senate often play legislative chicken late in a session, but rarely have the stakes been so high. Next year’s budget is about $24 billion.
Going into Wednesday’s committee hearing, no one could be sure how the Ways and Means members would vote. One legislator said he heard the vote would be 11-8, but he didn’t know whether that would be in favor or against.
Donahue began by saying it was needed to protect the state’s public colleges and universities from suffering further cuts in state aid.
He said SB284 would lead to perhaps a $1,500 fee per student for the 220,000 full- and part-time students on Louisiana’s campuses. The goal was to raise about $350 million on paper, he said. Donahue, R-Mandeville, quickly added that the legislation would create a tax credit that would offset the fee so students wouldn’t actually have to pay anything.
Tim Barfield, the state Revenue Department secretary, sitting at the witness table to Donahue’s right, said it wouldn’t actually raise any new revenue.
That prompted a set of incredulous questions and comments by Prairieville Rep. Eddie Lambert, a Republican.
“Why are we going through this gyration to come up with an additional fee?” Lambert asked.
“It sounds like what we’re coming up with is a fictitious fee,” he said two minutes later.
Donahue then acknowledged the real purpose behind the legislation. “It’s allowing us to offset the taxes we’ve raised,” he said.
By that, he meant that it was aimed at allowing Jindal to remain within the anti-tax guidelines established by Grover Norquist’s Americans for Tax Reform, a Washington, D.C.-based lobbying group. In 2003, when Jindal first ran for governor, he took the group’s pledge never to raise taxes.
But the group’s guidelines, as Barfield acknowledged to the committee, allow taxes to be raised as long as they are offset — on a dollar per dollar basis — by tax decreases.
One way to decrease taxes is through creating a tax credit.
By creating $350 million in phantom fees, the legislation also would create $350 million in tax credits that Jindal could use to offset the $500 million or $600 million in new revenue that the Legislature is proposing to raise.
“This would be a very important piece of the pie in terms of tax neutrality,” Barfield said.
State Rep. Robert Johnson, D-Marksville, got Barfield to acknowledge that ATR had signed off on SB284.
Joseph Rallo, the commissioner of Higher Education, said the measure was needed to prevent deep budget cuts to public colleges and universities.
Several minutes later, Scott Cornelius, a 23-year-old senior majoring in geography at LSU, came to the witness table.
“It doesn’t do anything to improve the standing of institutions in this budget,” Cornelius said. “That leaves only one person that this bill actually helps, that this bill is for, and that is Gov. Jindal. It is to help avoid breaking his pledge and thus to help avoid him from vetoing this budget. You may think this is a reasonable reason to pass a bill. But it isn’t because you all have the power to override his veto.”
The deciding vote was cast by Rep. Tom Willmott, R-Kenner. A 55-year-old attorney, Willmott said afterward that he entered the committee room leaning in favor of the measure but decided to vote no after listening to the witnesses’ testimony and his colleagues’ comments.
“It is a fictitious arrangement,” he said of the bill. “It sets bad precedent.”
Willmott said the Governor’s Office and higher education leaders lobbied him before the vote.
“I stood my ground and voted my convictions, although it may not have been popular with some people,” Willmott said.
Barfield was nearly at a loss for words after the vote but said it raised the possibility of a budget veto by Jindal.
“We’ve got to go back and regroup,” he said. “We’ve got other options.”
Robideaux said he voted against the legislation because it could have created unintended problems such as the creation of even bigger fake tax credits to offset bigger tax increases.
“It was an unnecessary piece of legislation, Robideaux said, adding, “I don’t think there will be enough other offsets to satisfy the governor and the pledge he’s taken,”
Woody Oge, chairman of the Louisiana Community and Technical College System board, called the House vote a “setback” but said, “We still have faith that the Legislature will come up with a solution to keep us whole.”
Kyle Plotkin, the governor’s chief of staff, released an optimistic statement afterward.
“The budget deal is still baking,” he said. “There’s still time to get a budget done that is balanced, protects higher education and healthcare, and doesn’t raise taxes.”
State Rep. John Bel Edwards, of Amite and the Democratic candidate for governor, predicted that the Legislature would override Jindal if it comes to that.
“If he vetoes the budget because we didn’t pass a piece of fiction that Hemingway would be proud of, shame on him,” Edwards said.
Elizabeth Crisp of The Advocate Capitol news bureau contributed to this report.